Because of the explosive growth in technology within the last few decades, individuals, organizations and businesses have become linked together inextricably through various means of electronic communications. Utilizing software applications, computers and similar type devices connected to differing and multiple networks have allowed individuals and entities to conduct activities with increased efficiency and effectiveness. Advancements in technology have enhanced a plethora of activities such as the transactional activities of buying and selling of goods and services. As the world community has increasingly become more intertwined via technology, world markets have become more integrated and transactional activities have become more interwoven.
Today, individuals, organizations and businesses purchase and sell a wide array of goods and services via the internet. An ever-increasing number of individuals, organizations and businesses are joining the on-line community, producing ever-increasing numbers of online sellers and buyers for goods and/or services. As a result of this growing online community of buyers and sellers, online auction websites have gained in popularity. While conventional online auctions methods and systems provide some benefits in comparison to the online fixed-priced market sales methods and systems, disadvantages and limitations do exist.
Among the disadvantages of conventional online auction methods and systems is a distortion in the selling price. Because online auction websites provide a forum for both buyers and sellers to electronically communicate and conduct auction transactions, many of the online auction website operators charge a fee to the sellers for the privilege and right to utilize the website's services and the website's forum. As a result of this fee, the sellers may decide to increase the initial asking price of the good or service in order to cover the cost of this fee. In the end, this fee may be passed to the buyers via a higher price for goods and/or services, thereby making auctioned goods and/or services more expensive.
The variable inability of a seller to obtain at least the retail price for a good or service is another of the many disadvantages of conventional online auction methods and systems. Once bidding commences at a predetermined starting bid, the seller may be obliged to sell the good or service at a price that is lower than the good or service's retail price. For example, a seller may wish to receive, at a minimum, the retail price of $10 for a product, setting the starting bid at $5. If only a single bid of $8 is proffered by a bidder before the close of the time designated for bidding, the seller may be obliged to accept the offer even though it is not equal to or greater than the seller's desired retail price of $10. Therefore utilizing conventional online auction systems and methods, sellers may not receive the desired retail price for the sale of their goods or services offered at auction.
What is needed is an innovative method and system that allows sellers in an online auction to obtain, at a minimum, a predetermined retail price for goods or services even if the auction's winning bid is less than the predetermined retail price. Moreover, what is needed is an innovative method and system that precludes distortion of the selling price all the while providing compensation to the online website operator for the use of the website's forum and services. Furthermore, what is needed is an innovative method and system that increases the efficiency and efficacy of online auctions for both buyers and sellers while eliminating many of the particular disadvantages of the conventional online auctions.
A lowering reserve online auction method and system, many of the embodiments which are disclosed herein, is a novel invention that meets the needs discussed in the above paragraph while also providing substantial advantages over the conventional online auction methods and systems. For example, an embodiment of the lowering reserve online auction method and system allows sellers to collect a pre-determined retail price for a particular good or service even if the winning bid by a customer is lower than that pre-determined retail price. This is accomplished by requiring each customer who desires to place a bid on the particular good or service (i.e., an item) to purchase an option before that customer is allowed to bid. Once the option is purchased, the customer can place a bid on the particular item being auctioned. Both the option's price and the number of options proffered for sale are set by either the seller and/or the website operator/administrator. For the benefit of use of the website's services to conduct a lower reserve online auction, the website operator/administrator receives all or a portion of the customer's winning bid amount.
As such, one advantage of the present invention is the merging of the online fixed-price sales methods with online auction methods, thereby allowing a seller to obtain the retail price amount for a good or service without requiring the customer who supplied the winning bid to pay the full retail price amount to the seller. Therefore, embodiments of the present invention combine the benefits of conventional auction methods and fixed-price sales methods. In the end, sellers are happy, because they obtained full retail price for the sale of an item; buyers are happy, because they obtained an item without having to pay full retail price for it.
When an individual or entity wishes to receive a fixed price for an item, the individual or entity will sell that item at a pre-determined fixed price. If a buyer does not agree to the seller's asking price, no sale is conducted. In an online fixed-price sale, the sale is only effectuated when a buyer agrees to the seller's asking price and agrees to provide the seller with payment sufficient to cover the asking price. While online fixed-price sales are popular, they do have certain drawbacks. For example, the seller's asking price may not accurately reflect the true value of the item. As such, the seller may set the asking-price of the item too high, thereby reducing the pool of potential buyers.
To combat certain drawbacks of online fixed-price sales, conventional online auctions can be utilized. Generally in a conventional online auction, a buyer and a seller agree to a mutually acceptable price for a particular item. Before the online auction begins, many times the seller has set an extremely low starting bid price at which bids for the auction are to begin. Then, each individual bidder places a bid that is higher than the previous bid placed. This process continues until the auction ends. At that time, the highest bidder wins the auction. Also in some instances, if a bidder is willing to pay the seller the retail price amount for the item during the auction, the auction suspends and that bidder instantly wins the auction. While conventional online auctions increase the pool of potential buyers and the accuracy of the valuation of an item, the seller may not receive the desired retail price for an item. As is evident, conventional online auctions have many drawbacks.
Embodiments of the present invention combine the advantages of both the online fixed-price market sales method and system and conventional online auction sales method and system while overcoming many of the disadvantages of each. Because sellers receive the pre-determined retail price for an item, the present invention performs similarly to a fixed-priced sale. On the other hand, a bidders bid as they would do ordinarily in an conventional online auction sale with the highest bidder winning the auction even if the winning bid is less than the retail price of the item, thereby allowing the present invention to function similarly to a conventional online auction. Because the present invention employs the advantages of a conventional online auction, more buyers will participate in the bidding process, thereby increasing the amount of bids on the good or service and thus causing the winning bid to more accurately reflect the true value of the item.
An embodiment of the present invention provides for an option to be purchased before a bid on an item can be submitted. If all the options are sold during the auction, the seller receives the proceeds of the sold options which equal the predetermined retail price of the item, and the website operator/administrator receives the proceeds of the payment of the winning bid amount. If, however, less than all the options are sold during the auction but the combination of the highest bid amount and the amount of the proceeds of the sale of the options exceed the pre-determined retail price of the item, then the seller receives the proceeds from the sale of those options and a portion of the highest bid which when aggregated together equal the pre-determined selling price of the item. Additionally, the website operator/administrator receives the remaining portion of the winning bid.
As is evident, all the main actors within the lowering reserve online auction method and system (i.e. seller, customer/buyer/winning bidder, and website operator/administrator) benefit. At the conclusion of a lowering reserve online auction, the seller can receive retail price (i.e. full value) for an item; the customer/buyer/winning bidder pays an amount that is lower than retail price for the purchase of an item; and the website operator/administrator can receive the customer's winning bid amount.